Old Rip Van Winkle bourbon: Creating the ultimate cult brand

Bourbon runs deep in American lore. David Crockett swigged it. Harry Truman liked a glass when playing poker. Screen star Tallulah Bankhead was famed for being able to polish off a bottle of the stuff in under 30 minutes.

Not all bourbons, however, are alike. Aged bourbon, it turns out, attracts an almost cultlike following. This brew has been carefully distilled and then sits in oak barrels for years — sometimes for nearly a quarter of a century — until ready to drink. When that much time and care go into making a product, it means it is expensive and hard to find. And that’s just the way Julian Van Winkle III, 61, the president of a small, premium Kentucky bourbon company, likes it. He calls it a strategy of scarcity.

Old Rip Van Winkle Distillery, with 2010 sales of $2 million, markets only about 7,000 cases a year — puny by liquor industry standards. Van Winkle not only is able to sell out his inventory — he says he could unload two or three times what he makes — but can also raise prices just about every year. That allows his two-person firm (his son Preston, 33, is marketing manager) to stay profitable while competing with giants such as Maker’s Mark and Wild Turkey.

Van Winkle’s approach is a good game plan for any small business that goes head to head with big competitors. Companies often get into trouble when they try to grow too big too fast. Van Winkle believes that if you make a great product and keep production low, you’ll never get stuck with big inventories when the economy turns tough. “That’s been the downfall of a lot of bourbon producers,” he says. “They just make too much of it. It loses all cachet and is not as special.”